French top court rules banks can't use company negligence to avoid liability for fraudulent transfers via outdated methods.
French court rules on bank liability
A decision by the French Court of Cassation on October 8, 2026, addressed whether a company's gross negligence could be used by banks to avoid liability for unauthorized payments.Ruling censures appellate court
The ruling criticized an appellate court that had accepted the company's gross negligence as a defense, even though the bank processed a fraudulent transfer using an outdated payment method that was no longer agreed upon.Fraud case against company
The case involved a fraud against the president of Eleco Panacol, later Hoenle Eleco, which occurred on December 16, 2019. An individual pretending to be the company's lawyer tricked the president's administrative assistant into sending an international transfer order to HSBC.Fraudulent transfer details
The order included a forged signature of the company's president and was sent by fax, then confirmed by email. The company and HSBC had a long-term contract, with the first in 2009 allowing fax-based orders. However, a 2017 contract introduced a secure system using the "3S Key" security key.Bank used outdated method
From March 2017, the company stopped using the old procedure, but HSBC executed the fraudulent transfer using the outdated method. The company sued HSBC for reimbursement and compensation, but the Paris Court of Appeal rejected its claims, citing the company's gross negligence.Court of Cassation overturns decision
The Court of Cassation overturned this decision, stating the bank could not use the company's gross negligence as a defense since the transfer was done using a payment method no longer agreed upon. The ruling clarified that banks cannot disregard agreed payment procedures and then blame the client to avoid liability.
